Health care consultant sticks with single-payer

By Nancy RemsenThe Burlington Free Press, Feb. 19, 2011

MONTPELIER, Vt. – The consultants who urged Vermont to move to a single-payer health-care system received 170 comments — complimenting, questioning and criticizing their draft report — but nothing persuaded the researchers to revise their basic recommendation, they told lawmakers Friday.

“It kept us busy and sleepless for a couple of weeks, but we really benefited from these comments,” William Hsiao, a Harvard University professor of economics and lead author of the report analyzing three health reform designs, told the House Health Care Committee. His team had double-checked its calculations and models, Hsiao said. “Our conclusion and recommendation didn’t change.”

Hsiao and three other principal authors came to the Statehouse to deliver their final report and field questions from two panels of lawmakers charged with writing a bill that would move the state toward ensuring all Vermonters had medical coverage, simplify the current claims chaos and curb mushrooming medical costs.

Gov. Peter Shumlin presented the Legislature with his plan to achieve a single-payer health system last week. It was based on the preliminary recommendations from Hsiao and his team.

The consultants haven’t been the only ones peppered with questions and comments in the month since Hsiao outlined the single-payer plan. Lawmakers have received plenty of feedback, and they had dozens of questions for the panel.

One of the top issues: How reliable is the estimate of $580 million savings from making the switch to a single-payer claims system? About $400 million of the savings would cover the cost of extending standard medical coverage to all Vermonters plus pay for investments in primary care and update some community hospitals.

Hsiao joked his team felt they were being “punched on both cheeks” on the question of the accuracy of the savings. Some people complained the researchers underestimated the savings, while others said they overestimated.

He cited, for example, Fletcher Allen Health Care, which submitted its own analysis of the savings it might experience as a result of processing fewer medical claims. Fletcher Allen argued Hsiao overestimated the medical center’s savings.

Hsiao countered, “They used a much narrower analysis of how a single-payer system would affect them.” He said the state’s largest medical center underestimated its savings by assuming Medicare and Medicaid claims wouldn’t be processed through a new, single claims pipeline — but they would. And Fletcher Allen calculated only clerical savings, he said, not savings for doctors and nurses who would spend less time on insurance paperwork.

Jonathan Gruber, economic professor at Massachusetts Institute of Technology and a co-author of the report, suggested Hsiao was almost too conservative in his assumptions about savings.

Hsiao explained, “Our approach was to try to underestimate the savings and overestimate the cost. We didn’t want to mislead the Legislature and governor into doing something risky.”

Deb Richter, a Vermont primary-care physician and long-time advocate for a single-payer system, is one of those who believe the state would save more. Still, she said after the presentation that she agreed with Hsiao: “It is better to underestimate than overestimate.”

Sen. Kevin Mullin, R-Rutland, asked the researchers whether creating a single-payer system that guaranteed coverage to all residents would make Vermont a magnet. “We keep hearing it isn’t an issue, but not to my satisfaction,” he said.

Gruber noted that under the federal Affordable Care Act, other states would have universal coverage, too. He added that studies of the impact of generous welfare benefits on migration have shown “it doesn’t seem to matter.”

Nicolas Rockler, an economist with Vermont-based Kavet, Rockler and Associates and another researcher, added, “The unemployed aren’t very mobile.”

Mullin also asked about the impact of the reform on medical professionals. He said some doctors told him if the state moved to a single-payer system, they would leave. He noted the state already has shortages among some medical professionals, especially in rural areas.

Hsiao said he received a telephone call from someone identifying herself as a doctor who said she knew a dozen physicians who would move to Vermont if it made the switch. He added that the plan called for using about $50 million of the $580 million in savings to recruit and retain primary-care physicians.

Rep. George Till, D-Jericho, asked Hsiao to address the concerns of employers who self-insure.

The House Health Care Committee had received a letter recently from John O’Kane, government programs manager at IBM Corp., arguing it should be allowed to continue to offer its own insurance plan.

Hsiao told lawmakers that self-insured plans could continue to operate but noted, “It would be up to employers and workers whether they wanted double insurance.” Vermont’s IBM employees and their families all would be eligible for the state’s standard coverage and would be paying for it, Hsiao said.

O’Kane, in a telephone interview, said IBM would object to paying for coverage the company didn’t want.

Speaking after his presentation, Hsiao said he was surprised at IBM’s opposition, given that the company faces similar circumstances for its employees in many countries. “They can still offer a uniform package,” he said, by providing supplementary coverage to Vermont’s standard plan.

“I understand rising health-care costs have been straining IBM,” Hsiao said, noting he met with their representatives in Vermont. “I’m surprised IBM wouldn’t consider this, because this would lower their costs for workers and their families.”

Armed with more information in the 200-page final report from the Hsiao team and with the Shumlin administration’s 80-page bill, House Health Care Committee Chairman Mark Larson, D-Burlington, said his committee would proceed with its review of the state’s next steps.

“The first question,” Larson said, “is whether there is enough evidence to believe a reformed system would be better.” He posed that question to the panel.

Gruber responded, “We aren’t in such a great place now. With no change, we know where we are headed — which is not sustainable.”